Loss ratios are like testicles

"An executive at one of the largest insurers told me that “other” is their most common cause for a claim. People (unlike bots) lazily tick that catch-all-box, rendering their data useless.

Tons of useful data are lost too: often they’re not machine readable; other times, it’s the humans who can’t read them (swallowed by a system whose architect retired in the 90s).

The exec went on to say their ‘loss ratio’ was 54% (in other words, if you paid $100 in premiums, they’d spend , on average , $54 on your claims). Among insurers, this passes for small talk, so he was a little taken aback when I countered that his customers have , on average, one testicle. I explained that knowing your customer ‘on average’ offers little insight. Worse, under the guise of a ‘statistical fact,’ a generalized average often paints a misleading picture."